Trading Bull and Bear Flags
The example above illustrates “Bull” and “Bear” flags from the Russell 2000 chart. Intraday charts produce more opportunities to trade “Flags” as the results will be known quicker than day or longer term charts. “Flag” patterns are continuous patterns and trades are only taken in the direction of the current major trend. In the chart above, “trade” A is taken in the direction of a major trend after a breakdown bar from “bearish flag.” A “short” trade is triggered below the low of the breakdown bar. A “stop” order is placed above the high of the “flag. Targets are set at 70 to 100% range of the “Flag.” Similarly, a “long” trade B is triggered in the uptrend. A “stop” order is placed below the low of the “flag” pattern and a “target” is set at 70 to 100% range of the “Flag.”